Treasury Secretary Janet Yellen is preparing to warn China that the US will continue to resist its “unfair” economic policies but will add that Washington is not trying to “suffocate” the Chinese economy through national security measures.
In Thursday’s speech, Yellen is expected to call for a “constructive and fair” economic relationship with China as relations between the two powers are mired in their worst point in decades.
Her comments come as Washington tries to restart efforts to stabilize a relationship that was derailed when a suspected Chinese spy balloon flew over the United States two months ago.
However, while Yellen will advocate a “healthy economic relationship” with China and describe the need for cooperation on issues from macroeconomics to climate change, her speech will have a strong focus on Washington’s areas of concern.
It will say that the United States will continue to secure its national security interests and those of its allies and protect human rights, and will resist the People’s Republic of China when necessary.
“We will communicate our concerns clearly to the People’s Republic of China,” Yellen plans to say, adding: “Our targeted actions may have economic implications (but they are) solely motivated by our concerns about our security and our values. Our goal is not to use these tools to gain a competitive economic advantage.”
Referring to export controls related to semiconductors and other measures taken by the Biden administration, Yellen will say that protecting certain technologies from the Chinese military is a “vital national interest.”
“(But) let me be clear, these national security measures are not designed . . . to stifle economic and technological modernization in China.”
US and Chinese officials agree that the relationship has deteriorated to its lowest point since normalization in 1979, with tensions rising sharply over Taiwan as the US has become more concerned about assertive Chinese military activity across the country.
Recently, the United States has become concerned about apparent Chinese moves to target companies including Micron, an Idaho-based memory chip maker.
Beijing believes Washington is trying to contain its rise by limiting its ability to develop a cutting-edge semiconductor industry, and claims the US is helping Taiwan resist its long-term plan to control it.
Chinese officials are also particularly frustrated that their American counterparts weave critical language into speeches that appear to be about improving relations. However, Yellen will say in her remarks that both countries “need to be able to discuss difficult issues openly.”
When Joe Biden and Xi Jinping met at the G-20 in November, the two presidents agreed on efforts to lay the “floor” for the relationship. They discussed a series of high-level exchanges that will begin with Antony Blinken, the Secretary of State, who is visiting Beijing in February.
But that plan was derailed when a spy balloon appeared over the United States and Blinken abruptly canceled what would have been the first visit to China by a Biden administration cabinet official in several years.
Beijing has resisted rescheduling the visit over concerns that the FBI may soon release a balloon report. But in a rare positive sign, two senior Commerce Department officials, including China expert Elizabeth Economy, traveled this month to Beijing for talks about a possible visit later this year by Gina Raimondo, the commerce secretary.
In her speech, Yellen will also reject suggestions that the United States is in decline, an apparent oblique reference to statements by officials in China that “the East is rising, while the West is falling.”
Statements about the decline of the United States have been around for decades. Yellin is expected to say.
The former Fed chair will also stress that countries need to work together on critical global issues despite their differences.
“This is what the world needs from its two largest economies.”
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